The core rule, and where mixed personal/business use complicates it
Every small-business owner has, at some point, stared at a receipt and wondered the same thing.
Can I actually claim this?
The ATO's underlying rule is more consistent than most people expect — it's the edge cases, and the mixed personal/business ones, that trip people up.
The short answer
You can generally claim a deduction for an expense if it was genuinely incurred in the course of running your business — not for a private or domestic purpose. Where an expense has both business and private use, you can only claim the business portion, calculated on a fair and reasonable basis.
The core categories that are usually deductible
Day-to-day operating costs — rent, utilities, insurance, business subscriptions
Stock and materials used to generate income
Wages, contractor payments and superannuation for staff
Marketing, advertising and website costs
Professional fees — accounting, bookkeeping, legal advice related to the business
Interest on money borrowed for business purposes
Depreciation on business equipment, vehicles and other depreciating assets used to earn income
Where it gets more complicated: mixed-use expenses
Plenty of expenses genuinely serve both business and personal purposes — a laptop used for work and for personal browsing, a car used for both client visits and the school run, a home office in a house you also live in. The ATO's rule is straightforward in principle: apportion the deduction to reflect actual business use, on a fair and reasonable basis, and keep records showing how you arrived at that split.
| Expense type | How apportionment usually works |
|---|---|
| Home-based business — occupancy costs | Based on the floor area used for business and how much of the time it's used that way |
| Vehicle used for both business and private trips | Based on a logbook or diarised record of business kilometres versus total kilometres |
| Device or equipment with mixed use | Based on genuine estimated business-use percentage, supported by usage records where possible |
The ATO's own example: if you use a laptop 50% of the time for business and 50% for private use, you can only claim 50% of the cost of repairing it — the same logic applies broadly across mixed-use expenses.
What generally can't be claimed
Purely private or domestic expenses, even if paid from the business account
The cost of a capital asset itself, in most cases — this is usually claimed over time through depreciation rather than as an upfront deduction
Entertainment expenses, in most circumstances
Fines and penalties
Why records matter as much as the deduction itself
An expense being genuinely deductible and being able to prove it are two different things. The ATO expects you to be able to show how you calculated any apportionment, not just assert a percentage — which is why a logbook, a floor-plan calculation, or a documented usage estimate matters as much as the receipt itself.
A quick self-check
Was this expense genuinely incurred to run the business, not for private benefit?
If it has mixed use, do I have a fair, reasonable and documented basis for the business percentage?
Is this a capital asset that should be depreciated over time, rather than claimed in full now?
Do I have a record that would support this claim if the ATO asked?
Free official resource
The ATO sets out the general rules for business deductions, including how to apportion mixed-use expenses.
ato.gov.au — Business deductions https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/income-and-deductions-for-business/deductions
When should you get professional help?
you have significant mixed-use expenses and want the apportionment done properly and defensibly;
you're unsure whether a large purchase should be claimed upfront or depreciated over time;
you're claiming home-based business or vehicle expenses for the first time; or
you want a review of what you've been claiming to check it's both accurate and complete.
Continue learning
→ Business Expense or Personal Expense — Where Is the Line?
→ I Paid a Business Expense Personally — How Should It Be Recorded?
→ What Accounting Records Do I Need to Keep — and for How Long?
SKC Accounting | Knowledge Centre | Knowledge Guide 026
Last reviewed: August 2026
General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.